Exhibit 10.1
SEVERANCE
AGREEMENT
This Agreement is entered into as of
September 19, 2008, between Aon Corporation, a Delaware
corporation, and
(the “Executive”).
WHEREAS, the Executive currently
serves as a key employee of the Company (as defined in
Section 1) and the Executive’s services and knowledge
are valuable to the Company in connection with the management of
one or more of the Company’s principal operating facilities,
divisions, departments or subsidiaries; and
WHEREAS, the Board (as defined in
Section 1) has determined that it is in the best interests of
the Company and its stockholders to secure the Executive’s
continued services and to ensure the Executive’s continued
dedication and objectivity in the event of any threat or occurrence
of, or negotiation or other action that could lead to, or create
the possibility of, a Change in Control (as defined in
Section 1) of the Company, without concern as to whether the
Executive might be hindered or distracted by personal uncertainties
and risks created by any such possible Change in Control, and to
encourage the Executive’s full attention and dedication to
the Company, the Board has authorized the Company to enter into
this Agreement.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements herein
contained, the Company and the Executive hereby agree as
follows:
1.
Definitions
. As used in this Agreement,
the following terms shall have the respective meanings set forth
below:
(a)
“Board” means the Board
of Directors of the Company.
(b)
“Cause”
means:
(1)
a material breach by the Executive
of those duties and responsibilities of the Executive which do not
differ in any material respect from the duties and responsibilities
of the Executive during the 90-day period immediately prior to a
Change in Control (other than as a result of incapacity due to
physical or mental illness) which is demonstrably willful and
deliberate on the Executive’s part, which is committed in bad
faith or without reasonable belief that such breach is in the best
interests of the Company and which is not remedied in a reasonable
period of time after receipt of written notice from the Company
specifying such breach;
(2)
Gross misconduct, theft, fraud,
breach of trust or any act of dishonesty by the Executive which
results in material harm to the Company; or
(3)
the commission by the Executive of a
felony involving moral turpitude.
(c)
“Change in Control”
means:
(1)
the acquisition by any individual,
entity or group (a “Person”), including any
“person” within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of either
(i) the then outstanding shares of common stock of the Company
(the “Outstanding Common Stock”) or (ii) the
combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors
(the “Outstanding Voting Securities”); excluding,
however, the following: (A) any acquisition directly from the
Company (excluding any acquisition resulting from the exercise of
an exercise, conversion or exchange privilege unless the security
being so exercised, converted or exchanged was acquired directly
from the Company), (B) any acquisition by the Company,
(C) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (3) of this
Section 1(c); provided further, that for purposes of clause
(B), if any Person (other than the Company or any employee benefit
plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company) shall become the
beneficial owner of 30% or more of the Outstanding Common Stock or
30% or more of the Outstanding Voting Securities by reason of an
acquisition by the Company, and such Person shall, after such
acquisition by the Company, become the beneficial owner of any
additional shares of the Outstanding Common Stock or any additional
Outstanding Voting Securities and such beneficial ownership is
publicly announced, such additional beneficial ownership shall
constitute a Change in Control;
(2)
individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of such
Board; provided that any individual who becomes a director of the
Company subsequent to the date hereof whose election, or nomination
for election by the Company’s stockholders, was approved by
the vote of at least a majority of the directors then comprising
the Incumbent Board shall be deemed a member of the Incumbent
Board; and provided further, that any individual who was initially
elected as a director of the Company as a result of an actual or
threatened solicitation by a Person other than the Board for the
purpose of opposing a solicitation by any other Person with respect
to the election or removal of directors, or any other actual or
threatened solicitation of proxies or consents by or on behalf of
any Person other than the Board shall not be deemed a member of the
Incumbent Board;
(3)
the consummation of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a “Corporate Transaction”); excluding,
however, a Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the
beneficial owners, respectively, of the Outstanding Common Stock
and the Outstanding Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding shares
of common
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stock, and the combined voting power
of the outstanding securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s
assets either directly or indirectly) in substantially the same
proportions relative to each other as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Common
Stock and the Outstanding Voting Securities, as the case may be,
(ii) no Person (other than: the Company; any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; the
corporation resulting from such Corporate Transaction; and any
Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 30% or more of the
Outstanding Common Stock or the Outstanding Voting Securities, as
the case may be) will beneficially own, directly or indirectly, 30%
or more of, respectively, the outstanding shares of common stock of
the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of directors
and (iii) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate
Transaction; or
(4)
the consummation of a plan of
complete liquidation or dissolution of the Company.
(d)
“Code” means the
Internal Revenue Code of 1986, as amended.
(e)
“Company” means Aon
Corporation, a Delaware corporation.
(f)
“Good Reason” means,
without the Executive’s express written consent, the
occurrence of any of the following events after a Change in
Control:
(1)
a material adverse change in the
nature or scope of the Executive’s authority, powers,
functions, duties or responsibilities as in effect immediately
prior to such Change in Control;
(2)
a material reduction by the Company
in the Executive’s rate of annual base salary or bonus
opportunity as in effect immediately prior to such Change in
Control or as the same may be increased from time to time
thereafter;
(3)
the failure of the Company to
continue in effect any material employee benefit plan or
compensation plan in which the Executive is participating
immediately prior to such Change in Control, unless the Executive
is permitted to participate in other plans providing the Executive
with substantially comparable benefits, or the taking of any action
by the Company which would adversely affect the Executive’s
participation in or materially reduce the Executive’s
benefits under any such plan;
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(4)
a change in the Executive’s
primary employment location to a location that is more than 50
miles from the primary location of the Executive’s employment
at the time of such Change in Control; or
(5)
the failure of the Company to obtain
from any successor or transferee of the Company an express written
and unconditional assumption of the Company’s obligations
under this Agreement, as further described in
Section 12(b) of this Agreement.
For purposes of this Agreement, any
good faith determination of Good Reason made by the Executive shall
be conclusive; provided , however , that an isolated,
insubstantial and inadvertent action taken in good faith and which
is remedied by the Company promptly after receipt of notice thereof
given by the Executive shall not constitute Good Reason.
The Executive’s employment may
be terminated by the Executive for Good Reason if (x) an event
or circumstance set forth in this Section 1(f) shall have
occurred and the Executive provides the Company with written notice
thereof within 90 days after the Executive has knowledge of the
occurrence or existence of such event or circumstance, which notice
shall specifically identify the event or circumstance that the
Executive believes constitutes Good Reason, (y) the Company
fails to correct the circumstance or event so identified within 30
days after the receipt of such notice, and (z) the Executive
resigns during the Termination Period and after the date of
delivery of the notice referred to in clause
(x) above.
(g)
“Nonqualifying
Termination” means a termination of the Executive’s
employment (1) by the Company for Cause, (2) by the
Executive for any reason other than a Good Reason, (3) as a
result of the Executive’s death or (4) by the Company
due to the Executive’s absence from the Executive’s
duties with the Company on a full-time basis for at least 180
consecutive days as a result of the Executive’s incapacity
due to physical or mental illness.
(h)
“Termination Date” means
the date during the Termination Period on which the
Executive’s employment is terminated other than by reason of
a Nonqualifying Termination.
(i)
“Termination Period”
means the period of time beginning with a Change in Control and
ending on the earlier to occur of (1) the date which is two
(2) years following such Change in Control and (2) the
Executive’s death; provided, however, that, anything in this
Agreement to the contrary notwithstanding, if a Change in Control
occurs and if the Executive’s employment with the Company was
terminated prior to the date on which the Change in Control occurs,
and if it is reasonably demonstrated by the Executive that such
termination of employment (a) was at the request of a third
party who was taking steps reasonably calculated to effect a Change
in Control or (b) otherwise arose in connection with or in
anticipation of a Change in Control, then for purposes of this
Agreement, “Termination Period” means the period of
time commencing upon the date immediately prior to the date of such
termination of employment and ending on the earlier to occur of
(x) two (2) years following such Change in Control and
(y) the Executive’s death.
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2.
Obligations of the
Executive . The
Executive agrees that in the event any person or group attempts a
Change in Control, he shall not voluntarily leave the employ of the
Company without Good Reason (a) until such attempted Change in
Control terminates or (b) if a Change in Control shall occur,
until 90 days following such Change in Control.
3.
Payments and Benefits Upon
Termination of Employment . If during the Termination Period the
employment of the Executive shall terminate, other than by reason
of a Nonqualifying Termination, and the Executive (or the
Executive’s executor or other legal representative in the
case of the Executive’s death or disability following such
termination) executes a noncompetition, nonsolicitation and
confidentiality agreement and release of claims substantially in
the form of Exhibit A hereto (the “Noncompetition
Agreement and Release”) within 60 days following the
Termination Date, the Company shall provide to the Executive, as
compensation for services rendered to the Company, and in
consideration of the covenants set forth in the Noncompetition
Agreement and Release, the payments and benefits described in this
Section 3. For purposes of this Agreement, the Executive
shall be considered to have a termination of employment with the
Company and its subsidiaries on the date the Executive has a
“separation from service” as described under
Section 409A of the Code and the guidance and Treasury
Regulations issued thereunder with the Company and its
subsidiaries. Notwithstanding the foregoing provisions of
this Section 3, if as a result of the Executive’s
termination of employment on the Termination Date the Executive is
entitled to severance payments and benefits, which benefits may,
without limitation, include enhanced supplemental pension benefits
conferred or equity awards granted as a result of termination of
employment, from the Company or any of its subsidiaries which are
not payable pursuant to this Agreement, but are payable pursuant to
an employment agreement or other compensation arrangement entered
into between the Executive and the Company or any of its
subsidiaries (“Alternative Severance Payments and
Benefits”), the Executive shall have no right to any payments
or benefits pursuant to this Section 3 unless (i) the
Executive (or the Executive’s executor or other legal
representative in the case of the Executive’s death or
disability following such termination) executes the Noncompetition
Agreement and Release and a waiver in the form of Exhibit B
hereto (the “Waiver of Severance Payments and
Benefits”) within 60 days following the Termination Date
waiving all rights to the Alternative Severance Payments and
Benefits, other than rights to Alternative Equity Vesting (as
defined in Section 4 hereof), and has not revoked the
Noncompetition Agreement and Release and (ii) the payments and
benefits to be received by the Executive pursuant to this
Section 3 are reduced by the amount of the Alternative
Severance Payments and Benefits, if any, previously received by the
Executive.
(a)
Except as otherwise provided in
Section 6, the Company shall pay to the Executive (or the
Executive’s beneficiary or estate, as the case may be) within
30 days following the date of execution of the Noncompetition
Agreement and Release and, if applicable, the Waiver of Severance
Payments and Benefits:
(1)
a cash amount (subject to any
applicable payroll or other taxes required to be withheld pursuant
to Section 7 and any deductions authorized by the Executive)
equal to the sum of (i) the Executive’s full annual base
salary from the Company and its affiliated companies through the
Termination Date, to the extent not theretofore paid, (ii) the
average of the Executive’s annual cash incentive for each of
the three fiscal years immediately preceding the fiscal year in
which the Termination Date
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occurs, multiplied by a fraction,
the numerator of which is the number of days in the fiscal year in
which the Termination Date occurs and the denominator of which is
365 or 366, as applicable, and (iii) any accrued vacation pay,
in each case to the extent not theretofore paid; plus
(2)
a lump sum cash amount (subject to
any applicable payroll or other taxes required to be withheld
pursuant to Section 7 and any deductions authorized by the
Executive) in an amount equal to two (2) times the sum of
(a) Executive’s annual base salary from the Company and
its affiliated companies in effect on the Termination Date and
(b) the average incentive compensation paid to the Executive
by the Company over the previous two years; plus
(3)
a lump sum cash amount (subject to
any applicable payroll or other taxes required to be withheld
pursuant to Section 7 and any deductions authorized by the
Executive) in an amount equal to the amount forfeited by the
Executive under any qualified defined contribution plan maintained
by the Company or any of its subsidiaries as a result of the
Executive’s termination of employment.
(b)
The Executive shall become fully
(100%) vested in the Executive’s accrued benefits under the
Aon Corporation Excess Benefit Plan, the Aon Corporation
Supplemental Savings Plan and the Aon Corporation Supplemental
Employee Stock Ownership Plan, or successor plans in effect on the
date of the Executive’s termination of employment (the
“Nonqualified Plans”). The Executive’s
accrued benefits under the Aon Corporation Excess Benefit Plan or
the Aon Corporation Supplemental Savings Plan, whichever plan is
applicable to the Executive on the date of the Executive’s
termination of employment, shall be determined by crediting the
Executive with two (2) additional years of age and service
credits and, in the case of the Aon Corporation Supplemental
Savings Plan, two (2) additional years of Retirement Plan
Contributions.
(c)
For the period commencing on the
Termination Date and ending on the earlier of (i) the date
which is two(2) years following the Termination Date and
(ii) the date on which the Executive becomes eligible to
participate in and receive medical, dental and life insurance
benefits under a plan or arrangement sponsored by another employer
having benefits substantially equivalent to the benefits provided
pursuant to this Section 3(c), the Company shall continue the
Executive’s medical, dental and life insurance coverage,
under the Company-sponsored plans or otherwise, upon the same terms
and otherwise to the same extent as such coverage shall have been
in effect immediately prior to the Executive’s Termination
Date, and the Company and the Executive
